Not enough renewable energy to meet global demand: Aramco chief

Not enough renewable energy to meet global demand: Aramco chief
Amin Nasser speaking at the SGI Forum.
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Updated 05 December 2023
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Not enough renewable energy to meet global demand: Aramco chief

Not enough renewable energy to meet global demand: Aramco chief

RIYADH: The amount of renewable energy coming to the international market falls short of fulfilling the rising demand, according to Saudi Arabian Oil Co.’s CEO. 

Speaking on a panel at the Saudi Green Initiative Forum on the sidelines of the 2023 UN Climate Change Conference, Amin Nasser highlighted that more investments are needed in the oil and gas sector to ensure a smooth energy transition.

“Even with all the renewable coming to the market, it is still not enough to handle the additional demand we are seeing,” said Nasser. 

He added: “If you compare the investments in the energy sector, it was around $740 billion. Right now, we are doing 40 percent below that at around $500 billion. Considering the higher demand we are anticipating in the future, I think we need more investments.”

Patrick Pouyanné, CEO of TotalEnergies, who was also present on the panel, said that investments in the energy sector are rising, but the industry should learn how to split investments between renewables and hydrocarbons. 

“Investments in the energy sector are growing. The question is, how do we split these investments? Because we want to triple renewables, and at the same time, we need to maintain the production of oil and gas, which is the energy of today. Let us do more investments in the energy sector, but in an orderly manner,” said Pouyanné. 

During the talk, Nasser highlighted that the demand for clean energies like green hydrogen remains low due to its high associated costs.

Regarding the world’s energy divide based on socio-economic characteristics, Nasser said: “Today, 60 percent of what we produce goes to the global south, and 40 percent goes to the global north. By 2050, almost 70 percent will go to the Global South, and in hydrocarbons, 80 percent will be going to the Global South.” 

Nasser added: “We need to take care of all stakeholders in terms of making sure that we provide affordable, sustainable, and secure energy for the whole world.” 

The Aramco chief further noted that Saudi Aramco is one of the energy companies in the world that has made significant strides in ensuring sustainability in its operations. 

According to Nasser, today, Saudi Aramco has the lowest average methane intensity and CO2 intensity per barrel of oil globally. He went on to add that Saudi Aramco will continue to drive it down, reiterating that they have made the commitment to zero methane by 2030. Furthermore, Nasser informed that they are building the carbon capture and storage and they are also getting into e-fuels.

Last year, Saudi Aramco partnered with the Kingdom’s Ministry of Energy to establish a carbon capture and storage hub in the region. 

Following the launch, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said the hub will have a storage capacity of up to 9 million tons of carbon dioxide annually by 2027. 


Oil Updates – crude prices cling to gains amid concerns about Red Sea attacks on shipping

Oil Updates – crude prices cling to gains amid concerns about Red Sea attacks on shipping
Updated 20 sec ago
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Oil Updates – crude prices cling to gains amid concerns about Red Sea attacks on shipping

Oil Updates – crude prices cling to gains amid concerns about Red Sea attacks on shipping

RIYADH: Oil prices on Tuesday mostly held onto gains made a day earlier amid attacks on shipping in the Red Sea that have exacerbated supply worries, according to Reuters.

Brent crude futures fell 1 cent to $82.52 a barrel by 7:35 a.m Saudi time, while US West Texas Intermediate crude futures rose 1 cent to $77.59 a barrel.

“Concerns around shipping disruptions in the Red Sea have supported a rebound in the price of crude oil overnight, offsetting a more hawkish Fed currently weighing on the demand side of the equation,” said Tony Sycamore, an analyst at IG in Sydney.

The attacks by Iran-aligned Houthis in support of Palestinians have increased freight rates and shipping times. On Monday, US Central Command said that the Houthis had unsuccessfully fired a missile at the US flagged oil tanker Torm Thor in the Gulf of Aden on Feb. 24.

US President Joe Biden said on Monday he hopes to have a ceasefire in the Israel-Hamas conflict in Gaza start by next Monday. In public, Israel and Hamas continued to take positions far apart on a possible truce, while blaming each other for delays.

Both oil benchmarks settled more than 1 percent higher on Monday which followed declines of 2 percent-3 percent over the previous week as markets factored in a greater likelihood that rate cuts might take longer to come.

Kansas City Federal Reserve Bank President Jeffrey Schmid on Monday used a debut speech on policy to signal that he, like most of his central banking colleagues, is in no rush to cut interest rates. High borrowing costs typically reduce economic growth and oil demand.

Oil prices were also supported on Tuesday by indications of improved demand in China.

“Concerns over Chinese demand are abating, as refineries continue brisk buying in the physical market after a boom in Lunar New Year travel. This is despite them having planned more maintenance halts than usual,” analysts from ANZ Bank said in a note.

A market focus for the day will be the American Petroleum Institute industry group’s weekly data on US crude inventories which is due to be released at 0.30 a.m. on Wednesday.

Analysts polled by Reuters on Monday estimated on average that crude inventories rose by about 1.8 million barrels in the week to Feb. 23. 


WTO conference spotlights global trade challenges and collaborative solutions

WTO conference spotlights global trade challenges and collaborative solutions
Updated 27 February 2024
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WTO conference spotlights global trade challenges and collaborative solutions

WTO conference spotlights global trade challenges and collaborative solutions
  • Established in 1995, the World Trade Organization serves as global authority governing international trade regulations
  • The four-day conference, which kicked off on Monday, will feature trade ministers, senior officials from around the world

RIYADH: Global trading system accessibility, intellectual property, and dispute settlement take center stage as the 13th World Trade Organization Ministerial Conference commenced in Abu Dhabi.   

The four-day event, starting on Feb. 26, will address these issues within the WTO, featuring the participation of trade ministers and senior officials from around the world, the Saudi Press Agency reported. 

The event will bring together 175 member states, private sector leaders, nongovernmental organizations, and civil society representatives.  

The goal is to collaborate on advancing a more efficient, sustainable, and inclusive trading system while enhancing the effectiveness of trade policies and programs. 

Participants in this conference edition aim to build upon the achievements of the previous ministerial conference held in Geneva in June 2022. The event witnessed accomplishments in supporting fisheries, food security, and e-commerce, the SPA report added. 

Speaking on behalf of the Saudi government, Commerce Minister Majid Al-Qasabi began his video address by pointing out that the event provides a pivotal opportunity to mark the WTO’s 30th anniversary.  

“We all look forward to working with you to achieve successful outcomes of the MC 13. Such outcomes would support restoring trust in the multilateral trading system, that is facing significant challenges and headwinds, confirming the essential role of the WTO, and reiterating the global trade agenda,” he said.  

Al-Qasabi warmly welcomed Comoros and Timor-Leste as new members of the WTO, reaffirming the commitment to accelerating the remaining accession.  

He also announced the Kingdom’s approval of the Agreement on Fisheries Subsidies, noting the WTO’s contribution to the economic growth and development of its members.  

The minister emphasized the importance for the Kingdom to achieve constructive and meaningful outcomes in Abu Dhabi and beyond. 

He concluded by reaffirming Saudi Arabia’s commitment to working constructively with all members to ensure the success of the 13th ministerial conference and beyond. 

Established in 1995, the WTO serves as the global authority governing international trade regulations. Its biennial ministerial conference acts as the paramount decision-making platform, bringing together ministers and senior officials from all member nations to assess, revise, and enhance the treaties shaping the global trade framework.  

Ahead of the event, WTO Director General Ngozi Okonjo-Iweala unveiled a $50 million initiative aimed at empowering female entrepreneurs in developing countries. 

The new fund looks to unlock the power of the digital economy, helping women exporters overcome financing hurdles and capture untapped opportunities. 

“This initiative embodies our collective commitment to empowering women,” Okonjo-Iweala said, adding that it is a crucial step toward addressing the financing gap faced by women entrepreneurs, who are “key drivers of economic growth and development.” 

Meanwhile, Thani bin Ahmed Al-Zeyoudi, the UAE’s minister of state for foreign trade and chair of the 13th WTO Ministerial Conference 2024, announced that the country allocated $5 million to the $50 million fund.  

Abdullah bin Zayed Al-Nahyan, the UAE’s minister of foreign affairs, earlier announced that the Gulf country will provide a $10 million grant to support several key initiatives of the WTO.  

He added that the grant would be allocated to the Fisheries Funding Mechanism, the Enhanced Integrated Framework, and the WEIDE fund that will be launched during the event.

 


Moody’s affirms credit ratings of key Saudi companies

Moody’s affirms credit ratings of key Saudi companies
Updated 26 February 2024
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Moody’s affirms credit ratings of key Saudi companies

Moody’s affirms credit ratings of key Saudi companies

RIYADH: Several prominent Saudi companies received affirmation on their credit ratings from Moody’s Investor Services, a leading global provider of financial assessments, research, and risk analysis.

Following the agency’s recent update to its Government-Related Issuers Methodology, several firms, including Saudi Basic Industries Corp., Saudi Telecom Co., and Saudi Electricity Co., have maintained their A1 ratings, while Saudi Arabian Mining Co., also known as Ma’aden, continues to hold a Baa1 rating.  

For SABIC, the A1 rating acknowledges its strong global presence in the petrochemicals market, competitive cost structure, and robust financial health.  

Moody’s also highlights the cyclical nature of SABIC’s operations and its concentration in Saudi Arabia as considerations. 

stc’s A1 rating reflects its dominant position in the Saudi telecommunications sector, strong financial metrics, and substantial government support. Challenges include market competition and the capital intensity of the telecom industry, Moody’s stated. 

SEC’s rating considers its integrated electricity operations, market dominance, and regulatory support balanced against the company’s growing debt burden due to significant infrastructure investments. 

Ma’aden’s Baa1 rating is supported by its diversified production, low-cost operations, and strategic importance to Saudi Arabia’s economy. 

The company’s exposure to commodity price volatility and its expansion plans are areas of focus. 

The positive outlooks for SABIC, stc, and SEC align with Moody’s view on the government of Saudi Arabia, indicating a high likelihood of state support.  

Furthermore, Ma’aden’s stable outlook reflects its solid financial policies and liquidity management. 

The ratings of the Saudi companies could potentially be upgraded or downgraded based on several factors outlined by Moody’s.  

For SABIC, an upgrade could be on the horizon if the ratings of the Saudi government or Saudi Aramco are elevated or if the company itself demonstrates improved revenue and profitability and maintains strong credit metrics and liquidity.  

Conversely, SABIC’s ratings might face a downgrade if the company experiences a significant downturn in operating performance or engages in heavy debt-financed investments, pushing its deficit to earnings before interest, taxes, depreciation, and amortization ratio toward a multiple of 1.5. 

Similarly, stc could see its scores positively impacted if the ratings of the government or the Public Investment Fund are upgraded, given its status as one of the highest-rated telecom operators globally.  

However, an escalation in competition, debt-financed acquisitions, or sustained negative free cash flow could apply downward pressure on stc’s ratings. Any decrease in the government’s or PIF’s ratings would also likely result in a downgrade for stc. 

SEC’s situation mirrors that of the aforementioned entities, with the potential for an upgrade if the sovereign rating of Saudi Arabia or the PIF improves, contingent upon the company maintaining strong operational and financial performance.  

A downgrade could occur if there is a notable decline in the company’s liquidity profile or its financial metrics weaken significantly. 

Ma’aden’s ratings could be elevated if the company successfully reduces its debt relative to EBITDA and boosts its retained cash flow to net debt ratio while maintaining strong liquidity. 

Conversely, an increase in debt and EBITDA ratio beyond certain thresholds or a significant weakening of liquidity could trigger a downgrade.  

Adjustments in the perceived likelihood of support from PIF or the government in times of financial stress could also influence Ma’aden’s ratings.


Closing Bell: TASI drops to 12,532, records $2.4bn trade volume  

Closing Bell: TASI drops to 12,532, records $2.4bn trade volume  
Updated 26 February 2024
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Closing Bell: TASI drops to 12,532, records $2.4bn trade volume  

Closing Bell: TASI drops to 12,532, records $2.4bn trade volume  

RIYADH: Saudi Arabia’s Tadawul All Share Index closed at 12,531.76 points on Monday, marking a decrease of 72.83 points or 0.58 percent.   

The parallel market Nomu concluded at 25,592.61, registering a fall of 109.54 points, or 0.43 percent. Alongside, the MSCI Index also descended by 3.81 points to settle at 1,616.76, a drop of 0.24 percent.   

By the day’s end, the main index posted a trading value of SR9.15 billion ($2.4 billion) with 42 stocks advancing and 186 declining. On the other hand, Nomu reported a trade volume of SR47.1 million.   

TASI’s top performer was Saudi Arabian Amiantit Co., which saw a 7.69 percent jump to SR31.50.

Maharah Human Resources Co. and Wataniya Insurance Co. also recorded notable gains, with their shares closing at SR7.21 and SR22.56, marking an increase of 6.19 percent and 5.82 percent, respectively. The Co. for Cooperative Insurance and Saudi Paper Manufacturing Co. also fared well.   

On the announcement front, Saudi German Health successfully concluded the offering of its Saudi Riyal-denominated sukuk, reaching a total value of SR1 billion.  

The offering comprised 1 million sukuk, each with a nominal value of SR1,000, and a fixed annual yield of 7.20 percent, paid out quarterly over a maturity period of five years.  

The company has specified that under certain conditions detailed in the base prospectus and the final terms, the sukuk may be redeemed before their maturity date.

Investors can review these final terms, which will be available on Al Rajhi Capital’s website starting Mar. 6, 2024, the entity overseeing the subscription management for this issuance.  

The allocation of sukuk to investors will be finalized by the end of Feb. 29, with the settlement process concluding on Mar. 6, 2024.   

Furthermore, Saudi German Health plans to list the sukuk on Saudi Stock Exchange once all regulatory procedures necessary for the listing are completed, with an announcement to be made at the appropriate time.  

Moreover, Alinma Bank is set to bolster its Tier 1 capital through a strategic move to issue additional sukuk denominated in US dollars.   

This initiative, aimed at enhancing the bank’s capital base and supporting its general banking operations, follows a board resolution authorizing the CEO to manage the issuance process.  

The planned issuance will be executed by a special-purpose vehicle, targeting qualified investors both within Saudi Arabia and internationally.   

Participating as joint lead managers, Abu Dhabi Islamic Bank, Alinma Investment Co., and Emirates NBD, have been appointed to oversee the issuance, as well as J.P. Morgan Securities, MUFG Securities EMEA, and Standard Chartered Bank.


Saudi Arabia records 10% surge in number of factories

Saudi Arabia records 10% surge in number of factories
Updated 26 February 2024
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Saudi Arabia records 10% surge in number of factories

Saudi Arabia records 10% surge in number of factories

RIYADH: The number of industrial units in Saudi Arabia recorded a 10 percent surge year on year in 2023 to reach 11, 549, according to the Ministry of Industry and Mineral Resources.

A spokesman for the minister, Jarrah bin Mohammed Al-Jarrah, revealed that the new industrial establishments were set up with an investment of SR1.54 trillion ($48.4 billion).

The rise in the number of factories falls in line with the Kingdom’s plan of boosting industrialization and achieving a target of 36,000 plants by 2035.

Moreover, the number of new industrial licenses issued in 2023 reached 1,379, with investments amounting to more than SR81 billion.

On the other hand, production began in a total of 1,058 factories during the same year with investments amounting to SR45 billion.

In addition, Al-Jarrah noted that the new licenses were distributed among 25 industrial activities, led by food products manufacturing with 244 permits, followed by the manufacturing of non-metallic mineral products (176) and the manufacturing of formed metal products with 165. A total of 123 licenses were issued to factories engaged in the manufacturing of rubber and plastic products.

With a vision to increase the number of factories to 36,000 by 2035, including 4,000 which will be fully automated, Saudi Arabia is poised to create a dynamic and innovative production landscape.

The adoption of advanced technologies, including artificial intelligence, 3D printing, and robotics, positions Saudi industries as global leaders of this revolution.

The Kingdom’s industrial sector is experiencing sustained growth, with investments in manufacturing reaching $132 billion since the launch of the economic diversification strategy Vision 2030 in 2016.